MIDF Research raises target price for Tasco to RM1.31 on vaccine delivery collaboration

TheEdge Fri, Apr 02, 2021 08:57am - 1 month ago

KUALA LUMPUR (April 2): MIDF Research has maitained its “Buy” rating on Tasco Bhd at RM1.10 with a higher target price of RM1.31 (from RM1.14) after Tasco entered a Memorandum of Understanding with MASKargo to collaborate for end-to-end logistics delivery services of COVID-19 vaccines all over Malaysia.

In a note today, the research house said Tasco’s Cold Supply Chain Logistics CSCL is currently the largest cold chain provider in Malaysia with estimated circa 35% market share of the segment with key customers consists of FMCG retailers, F&B players and pharmaceutical groups.

MIDF said this represents around 50,000 – 52,000 pallet capacity.

“Its biggest cold storage warehouse is in Shah Alam with pallets capacity of 26,000 with built-up area of 330,000 sq. ft.

“Other locations include Pulau Indah, Port Klang and Bukit Raja.

“With 24 logistic centres in Malaysia, and more than 150 units of multiple temperature-controlled truck, we believe Tasco will be able to deliver as a logistics provider for the country vaccination needs,” it said.

MIDF maintained its earnings forecast for Tasco and said that at this juncture, it is still premature to estimate any earnings contribution from this collaboration as it is still at a very early stage.

The research house said its target price is derived by pegging our FY22 EPS to a revised forward PE ratio of 23.0x (previously 20.0x) – which is the above +1 standard deviation of B/F 2 years P/E ratio.

“Moving forward, we believe the earnings outlook for Tasco will remain sustainable,” it said.

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